Government pushed for confirmation on claims carve-out
The AFA has asked the government to confirm that advisers will be exempt from new licensing restrictions on life insurance claims handling, after guidance from ASIC released last week intimated that advisers would need an additional licence authorisation to assist clients with claims.
AFA chief executive Phil Kewin told sister brand ifa that the wording of royal commission legislation introduced into Parliament last month specified that licensing exemptions for claims handling would be removed, meaning those dealing with claims would have to apply for a variation to their AFSL.
“This comes back to recommendation 4.8 from the royal commission around both life and general insurance companies not handling claims efficiently, fairly and honestly,” Mr Kewin said.
“It wasn’t aimed at advisers, it was aimed at making sure those people did the right things and people dealing with claims on behalf of insurers were authorised. What is not clear is about other people dealing with claims, and our discussion with ASIC was that they were only releasing the information they had been given.”
While an information sheet released by ASIC on Friday had included advisers as part of a number of claims intermediaries requiring a new licence authorisation, Mr Kewin said subsequent discussions between the AFA and government had “led us to believe that advisers acting on behalf of clients should be exempt”.
“The regulations aren’t out, so they don’t say that at the moment, and with the void of information, that’s why people have come to that conclusion,” he said.
“It’s unfortunate because the government could have saved us that stress by clarifying that advisers acting on behalf of clients should be exempt. We’ve been following them up asking for the clarification and I’m hoping that clarity will come as soon as possible.”
In addition to the exemptions provided for lawyers and super trustees, ASIC’s information sheet provides for special exemptions for “claims handling and settling services provided to a person under an arrangement between an AFS licensee and the issuer of the insurance product prescribed by regulation (section 911A[el])”.
This section of the Corporations Act states that ASIC may make case-by-case licensing exemptions for certain groups specified in writing.
“The regulations will be where the detail is and we haven’t seen the regulations yet. We haven’t been told officially, but we think the regulations are going to contain a list of people that should be exempt,” Mr Kewin said.
“My message is that I certainly don’t want our members to worry because there’s enough on their plate as it is — we know the cost of every licence can be up to $3,000, not to mention the process of going through it. I hate to think advisers have to go through that process and I’d be disappointed if that was the outcome, but I don’t believe that’s likely.
“I am hoping common sense will prevail and we’ll see the exemption come out so we can move forward and those this was intended for can do what they need to do.”